What Happened?
Shares of video game publisher Electronic Arts (NASDAQ: EA) jumped 3.6% in the afternoon session after analyst commentary regarding the successful beta test for its upcoming title, Battlefield 6. The investment firm Oppenheimer maintained its Outperform rating and $185 price target for the company following a highly successful beta test for the upcoming game Battlefield 6. According to the firm, the beta, which ran from August 7 to 11, attracted over 5 million players and demonstrated "superior polish, excellent netcode, and an authentic Battlefield experience." The game's technical performance was also a key highlight, as EA managed the massive player surge without compromising the user experience. This positive development, which builds a strong case for the game's future commercial success, helped push the stock to a new all-time high of $170.11, reinforcing investor confidence.
After the initial pop the shares cooled down to $173.80, up 3.7% from previous close.
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What Is The Market Telling Us
Electronic Arts’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 5.8% on the news that the company reported strong first-quarter financial results that surpassed expectations, overshadowing a weaker outlook for the upcoming quarter. The video game publisher announced strong preliminary financial results for its first quarter, reporting net revenue of $1.671 billion and net bookings of $1.298 billion, both of which surpassed expectations. Despite the strong performance, the company also issued a weaker-than-expected forecast for its second quarter, which initially caused the stock to dip in after-hours trading. The company attributed the softer outlook to the timing of revenue recognition for upcoming game releases and increased marketing expenses. However, investor sentiment appeared to shift, focusing on the current strong results over the future guidance. The positive move was also supported by B of A Securities, which raised its price target on the stock to $168 from $166.
Electronic Arts is up 19.1% since the beginning of the year, and at $173.80 per share, has set a new 52-week high. Investors who bought $1,000 worth of Electronic Arts’s shares 5 years ago would now be looking at an investment worth $1,281.
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